Mortgage by conditional sale and specific performance: time not essential, and readiness must be judged from parties' conduct.

A transaction structured as an ostensible sale with a contemporaneous agreement to reconvey was treated as a mortgage by conditional sale because the arrangement secured money for ten years, the transferor remained in possession, and mutation did not occur. In contracts for sale of immovable property, time is ordinarily not of the essence, and no clear stipulation or conduct made it essential here. Readiness and willingness had to be judged from both parties' conduct: no adverse inference could be drawn against the plaintiff for non-production of a passbook not called for, while notice, telegram, and attendance at the Sub-Registrar's office supported the plaintiff's case and showed the defendant was in breach.

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Issues: (i) Whether the transaction was a mortgage in substance or an outright sale with an agreement to reconvey; (ii) whether time was of the essence of the contract for sale of immovable property; (iii) whether the plaintiff or the defendant committed breach by failing to be ready and willing to perform the agreement to sell.

Issue (i): Whether the transaction was a mortgage in substance or an outright sale with an agreement to reconvey.

Analysis: The surrounding circumstances showed that the ostensible sale and contemporaneous agreement to reconvey were structured to secure a sum of money for ten years at a return equivalent to interest, while the transferor remained in possession and the property was not mutated. The long period for reconveyance, the identical consideration, and the continued possession of the original owner supported the view that the arrangement bore the character of a mortgage by conditional sale rather than a genuine outright sale.

Conclusion: The transaction was, in substance, a mortgage by conditional sale.

Issue (ii): Whether time was of the essence of the contract for sale of immovable property.

Analysis: In contracts for sale of immovable property, time is ordinarily not the essence unless the agreement or conduct of the parties clearly shows a contrary intention. The defendant neither pleaded nor proved that time was made essential, and the materials did not show any clear stipulation or conduct converting the contractual period into an essential term.

Conclusion: Time was not the essence of the contract.

Issue (iii): Whether the plaintiff or the defendant committed breach by failing to be ready and willing to perform the agreement to sell.

Analysis: The courts below erred in drawing an adverse inference against the plaintiff for not producing a passbook when neither the defendant nor the court called upon him to do so. The evidence also showed that the plaintiff sent notice and telegram, remained present at the Sub-Registrar's office, and sought to have his presence recorded, whereas the defendant's stand on receipt of notice and attendance at the Sub-Registrar's office was inconsistent and unreliable. The defendant's conduct and evidence established that he was not ready and willing to perform his obligation.

Conclusion: The breach was committed by the defendant, and the plaintiff was ready and willing to perform his part of the contract.

Final Conclusion: The decree refusing specific performance could not stand, and the plaintiff was entitled to enforcement of the agreement on payment of the agreed consideration.

Ratio Decidendi: In a suit for specific performance of an agreement relating to immovable property, time is not ordinarily of the essence, adverse inference cannot be drawn for non-production of evidence not called for, and readiness and willingness must be assessed from the conduct of both parties, including whether the promisor was prepared to perform when called upon.

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